John Bouman and William McNary: No to more corporate tax breaks

As Illinois state government struggles with lingering budget problems, some of the state’s wealthiest corporations are demanding new tax loopholes we can ill afford.

Precipitated by the devastating Wall Street crash of 2008 and aggravated by unemployment, the state budget mess knows no easy solution. The state passed an income tax increase earlier this year only after the bond houses threatened the state with dire consequences if it did not. But without a plan to restructure the state’s existing debt, the new revenue has not been enough to both pay the bills and restore funding for vital public services. There is progress, but working out of the budget hole will take several years.

Most Illinoisans are sharing in the sacrifice necessitated by this crisis. Average taxpayers are paying more, state vendors and other small businesses are going unpaid for months, public and nonprofit employees are losing pay and increasingly their jobs, and communities are forced to cut back on basics like fire protection, libraries and school programs.

Perhaps most tragically, cuts have fallen hardest on those in greatest need, including the homeless, individuals with mental illness or disabilities, and survivors of domestic violence.

Yet some of our state’s most successful and privileged residents seem to feel they alone should escape responsibility. Just days before Chicago financial powerhouse CME Group announced a spectacular 29 percent increase in third-quarter profits, it was lobbying state lawmakers for $100 million in new tax breaks. Since other big, profitable Illinois companies like Caterpillar and Boeing enjoy such breaks, they argued, so CME should, too. Sears and Motorola have made similar claims.

Facing skeptical legislators worried about poking yet another hole in the state’s fragile budget and setting back the progress we have made, CME answered with the ultimate in corporate blackmail: Meet our demands or we’ll move out of state, taking our jobs with us. With the Illinois unemployment still topping 10 percent, that is no small threat.

State leaders must stand their ground. It is foolish for a state government still several billion dollars in debt to give away tax money owed to small businesses, medical and human services providers, local governments and even other corporations due tax refunds. Already 67 percent of all Illinois corporations pay no state income tax at all — that is hardly a good reason to create even more loopholes.

Poking a deeper hole in the state budget would cost Illinois jobs. Loss of state and local revenues has already resulted in widespread layoffs of nonprofit and public service workers; in the last year alone, Illinois lost 13,200 jobs in school district and local governments. The proposed CME tax break would directly deprive local governments of at least $25 million.

Moreover, increase stress in the state budget translates into job losses in the private sector, too. According to Illinois Partners for Human Services, state fiscal woes forced nearly half of its surveyed non-profits to lay off staff during this past year.

In recent days, there is talk of a corporate tax relief package that will also include some tax relief for working families. The deeply unfair Illinois tax system badly needs tax relief for lower-income families, but if the whole package knocks a deeper hole in the state budget, this is too high a price. No tax package should result in a net loss in the state’s ability to pay its bills and maintain vital services.

State government is hampered by hard times. To preserve essential services and jobs, we need a responsible approach to taxation that ensures adequate revenue, fairly raised. As for unpaid-for corporate tax loopholes, the timing couldn’t be worse.

As Illinois state government struggles with lingering budget problems, some of the state’s wealthiest corporations are demanding new tax loopholes we can ill afford.

Precipitated by the devastating Wall Street crash of 2008 and aggravated by unemployment, the state budget mess knows no easy solution. The state passed an income tax increase earlier this year only after the bond houses threatened the state with dire consequences if it did not. But without a plan to restructure the state’s existing debt, the new revenue has not been enough to both pay the bills and restore funding for vital public services. There is progress, but working out of the budget hole will take several years.

Most Illinoisans are sharing in the sacrifice necessitated by this crisis. Average taxpayers are paying more, state vendors and other small businesses are going unpaid for months, public and nonprofit employees are losing pay and increasingly their jobs, and communities are forced to cut back on basics like fire protection, libraries and school programs.

Perhaps most tragically, cuts have fallen hardest on those in greatest need, including the homeless, individuals with mental illness or disabilities, and survivors of domestic violence.
Yet some of our state’s most successful and privileged residents seem to feel they alone should escape responsibility. Just days before Chicago financial powerhouse CME Group announced a spectacular 29 percent increase in third-quarter profits, it was lobbying state lawmakers for $100 million in new tax breaks. Since other big, profitable Illinois companies like Caterpillar and Boeing enjoy such breaks, they argued, so CME should, too. Sears and Motorola have made similar claims.

Facing skeptical legislators worried about poking yet another hole in the state’s fragile budget and setting back the progress we have made, CME answered with the ultimate in corporate blackmail: Meet our demands or we’ll move out of state, taking our jobs with us. With the Illinois unemployment still topping 10 percent, that is no small threat.

State leaders must stand their ground. It is foolish for a state government still several billion dollars in debt to give away tax money owed to small businesses, medical and human services providers, local governments and even other corporations due tax refunds. Already 67 percent of all Illinois corporations pay no state income tax at all — that is hardly a good reason to create even more loopholes.

Poking a deeper hole in the state budget would cost Illinois jobs. Loss of state and local revenues has already resulted in widespread layoffs of nonprofit and public service workers; in the last year alone, Illinois lost 13,200 jobs in school district and local governments. The proposed CME tax break would directly deprive local governments of at least $25 million.

Moreover, increase stress in the state budget translates into job losses in the private sector, too. According to Illinois Partners for Human Services, state fiscal woes forced nearly half of its surveyed non-profits to lay off staff during this past year.

In recent days, there is talk of a corporate tax relief package that will also include some tax relief for working families. The deeply unfair Illinois tax system badly needs tax relief for lower-income families, but if the whole package knocks a deeper hole in the state budget, this is too high a price. No tax package should result in a net loss in the state’s ability to pay its bills and maintain vital services.

State government is hampered by hard times. To preserve essential services and jobs, we need a responsible approach to taxation that ensures adequate revenue, fairly raised. As for unpaid-for corporate tax loopholes, the timing couldn’t be worse.

John Bouman is a member of the Responsible Budget Coalition. William McNary is the group’s
legislative chair.
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